August 2012

Eye on Business

Environmental Assessment in Canada’s Arctic

By
Adam Chamberlain

Mining activity in Canada’s Arctic, especially in Nunavut, is accelerating. Given the relative infancy of mining in these regions and the environmental
challenges faced by operating in extreme northern environments, the environmental assessment (EA) process poses unique challenges for mining companies.
However, these challenges need not force mining companies headfirst into a wall of red tape. By taking a more active role on the ground with governments,
agencies and communities, mining companies may, in certain circumstances, be able to begin work before all aspects of the EA have been finalized.

Understanding the capacity of regulatory bodies in the region is instrumental in ensuring the successful completion of the EA process in Nunavut. The
Nunavut Impact Review Board (NIRB), a regulatory body created to consider the impacts of large projects like mines, will face challenges handling the surge
of incoming projects. The NIRB is fundamental to the development of the Nunavut economy, and while there are knowledgeable people working within the
regulator, the number of projects may exceed what those people have the capacity to shepherd through the approvals process.

This issue would be a challenge for a regulatory body regardless of its location but is exacerbated, in the case of the NIRB, by travel requirements and
distance issues in Nunavut. While there is no easy solution, proponents of mining or related developments need to be as proactive as possible through all
stages of the EA and other related permitting in engaging communities, governments and the regulatory community. This requires focus on the part of the
proponent and its partners. Time on the ground getting to know the stakeholders involved in the EA process is at least as important in the Arctic as
anywhere else. Commitment to stakeholders is more noticeable when an effort has been made to travel to and get to know the individuals involved.

One example of working around EA capacity issues is Baffinland Iron Mines Corporation’s approach to its Mary River project in Nunavut. Baffinland’s project
EA (known as “impact assessment” in Nunavut) has continued its progress through the regulatory approvals process over the past months. As the project was
nearing the home stretch of the NIRB process in October 2011, Baffinland applied to the NIRB to conduct certain development activities prior to completion
of the review of the broader Mary River project.

The NIRB’s initial response was that the extent of the pre-approval work Baffinland proposed was more significant than what the regulator was willing to
contemplate allowing to proceed. Baffinland’s revised application was scaled back significantly and resubmitted. The revised application was accepted by
the NIRB, with the single exception of the overwintering of a 10-million-litre fuel barge at Steensby Inlet near the project location at the north end of
Baffin Island.

Baffinland, however, chose to delay much of the on-site work that had been proposed for the immediate future. The company said the overwintering of fuel
was an integral part of the work it planned to accomplish; without it the rest of the work would have to wait for the final Project Certificate to be
issued. Although Baffinland did not proceed with the proposed activities, the NIRB’s consideration of work, pre-approval, is a good example of the
balancing act EA regulators must undertake, and of the uncertainties faced (and flexibility required) by proponents of large mining or related projects in
the Canadian Arctic.

Other issues will, no doubt, arise in different contexts related to various projects. Resolving them will require developers to be proactive and to have
knowledge of the stakeholders, the EA process and the best practices employed in modern EA. These related challenges, while significant, are largely
surmountable.

Adam Chamberlain is called to the Bars of Nunavut and Ontario. He is a partner and certified specialist in environmental law at Borden Ladner Gervais LLP.
Adam can be reached at achamberlain@blg.com or 416.367.6172.